Consumer Rights Relating to Financial Services in the Banking Sector

The banking sector in India is emerging as a highly competitive field. Smooth banking operations are the life of a nation’s economy. Gone are the days when nationalized banks ruled the way banking operations and services functioned in India. Today, the banking sector in India is dominated by private banks as well. They offer innovation through their banking solutions and financial services so as to attract more and more customers to opt for their services.

Banking Sector: Do their Services Come Under the Consumer Protection Act?

You can find a range of services offered by the banking sector, be it nationalized or private, in any part of India. So, what banking services are offered? At a basic level, banking services enable you to maintain your savings accounts, manage your investments properly and issue checks or withdraw cash as and when you need to conduct transactions. Any deficiency in the services of banks comes under the purview of the Consumer Protection Act. True, services differ from one bank to the other but the gist is that you must be able to enjoy their services without any difficulty. The same applies to financial services and corporations, whether owned by the state or private players.

Banking Sector: Are Depositors of Financial Services ‘Consumers’?

In most middle class families, funds are invested in pension schemes as a safe avenue of investment for their funds. The assurance of prompt repayment and full security investment attracts more customers to invest in such funds. For the same reason, such transactions are clearly for the purpose of a consideration. In the event of any default on the part of the bank or the financial service provider, the depositor is clearly a ‘consumer’ within the purview of the Consumer Protection Act.

Financial Services and Banking Sector: What happens if there is a Deficiency?

Most Indians are aware of saving and depositing small sums of money with the Indian Post Offices across the country. In an interesting case, the complainant had purchased some National Savings Certificates from the Post Office, based on the notification by the Government of India. The interest rate is the key factor that lures most Indians to opt for the scheme. In this case, the interest rate was raised to 11% with effect from 1987. However, the complainant’s certificates were not correct as the clerical staff calculated the old rate of interest and maturity value. The complainant filed a complaint that was upheld by the District Forum and the State Commission. By majority, the National Commission also upheld that the Government of India and the Post Office were bound to pay the complainant.

However, a twist in this tale is that one of the learned Members in the National Commission dissented in the judgment and stated that there is no deficiency in service on the part of the Government of India and the Post Office.

You may be wondering what the reason is, right?

Well, the dissenting member stated that the terms and conditions constitute a valid contract between the complainant and the Government of India. However, this contract was contrary to the terms notified later by the Government of India and therefore, it does not become a binding contract between the Government of India and the complainant.